JAKARTA, KOMPAS – The fiscal deficit in the oil and gas sector has become an important concern regarding performance in the energy sector in 2018. This sector is considered very vulnerable to deficits. This is due to the high volatility of crude oil prices in the global market. On the other hand, the use of biodiesel to reduce the deficit also faces a number of obstacles.

The National Coordinator of Publish What You Pay (PWYP) Indonesia Maryati Abdullah said that dependence on fossil energy has become a trap in national economic development. Moreover, due to political factors, the government finds it difficult to let go of the long-standing fossil energy subsidies. This condition, apart from the price volatility factor, worsened the position of the rupiah exchange rate against the US dollar.

“In a situation like this, a long-term strategy regarding efforts to reduce dependence on fossil energy must be implemented immediately. This will become a demand for future government policies,” said Maryati when contacted, Tuesday (25/12/2018), in Jakarta.

Based on the Indonesian Balance of Payments issued by Bank Indonesia, the oil and gas balance in the third quarter of 2018 was a deficit of 3.5 billion US dollars. This deficit is deeper than in the first quarter of 2018 which amounted to 2.4 billion US dollars or the second quarter of 2018 which amounted to 2.7 billion US dollars.

This is because, in addition to price volatility, the national fuel oil (BBM) consumption far exceeds the capacity of domestic oil production.

Based on the Bloomberg website, Tuesday night, the world price of crude oil for the WTI type was 42.53 US dollars per barrel, while for the type of Brent oil was 50.47 US dollars per barrel.

This deficit situation, continued Maryati, forces the government to increase coal production for export in 2018 in order to increase foreign exchange earnings.

In fact, in the 2015-2019 National Mid-Term Development Plan, the government limits coal production to 406 million tons in 2018. The government changed the 2018 production target to 485 million tons and gave an additional coal export quota of 100 million tons.

“There is an inconsistency in coal production between what has been planned and the realization in the field,” said Maryati.



Separately, Bob Soelaiman Effendi, a member of the Energy and Mineral Resources (ESDM) working group at the National Economic and Industry Committee (KEIN), said there was a way out to anticipate price volatility for primary energy sources, such as coal or oil and gas.

One of them is by utilizing nuclear energy (PLTN) as the primary energy source for electricity generation. Apart from nuclear, there are also geothermal and hydropower which are relatively unaffected by the movement of coal or oil and gas prices.

In addition, continued Bob, in order to achieve the target of a 23 percent new and renewable energy mix in 2025, it can only be done by building a nuclear power plant. Some people doubt that Indonesia can achieve the 23 percent target in the current way. Currently, the share of new and renewable energy in the national energy mix is ​​not more than 10 percent.

The Ministry of Energy and Mineral Resources has developed a number of strategies to reduce the oil and gas balance deficit. First, ask PT Pertamina (Persero) to buy all crude oil production which is part of the domestic upstream oil and gas cooperation contract (KKKS). Of the total crude oil production this year, which is estimated at 775,000 barrels per day, the KKKS’s share is 225,000 barrels per day. Pertamina said that the realization of this policy could only start in 2019.

Second, the obligation to mix biodiesel into diesel is known as mandatory B-20. Third, increase the coal export quota of 100 million tons. Fourth, maximizing the use of local content in upstream oil and gas projects or in electricity. The fifth or last is the digitization of all Pertamina public refueling stations (SPBU).

The government is targeting the mandatory B-20 in 2019 to save foreign exchange up to 4 billion US dollars. The use of the B-20 has been expanded to the non-public service sector (PSO) starting September 1, 2018.

Source: Kompas